China marks a growth in crypto custody sector despite the ban

A Chinese crypto-startup set its feet in China, a mainland where trading in virtual currencies is strictly banned.

The newly incepted InVault has begun offering its cryptocurrency custody services last week in China. The Shanghai-based startup aims to attract cryptocurrency exchanges as its primary clients rather than luring in individual clients to deposit their crypto assets.

A custodian is supposed to hold clients cash and securities for safekeeping in physical and electronic form. Now it has raised several questions on China’s crackdown as it has proved inefficiency to enforce the crypto ban.

The launch of this startup comes at a point when the government has termed the trading in cryptocurrencies as illegal. InVaul has found a way of circumventing the ongoing crackdown. Kenneth Xu, CEO and founder of InVault, has said that the only way of securing the cryptocurrencies is hiding them from human oversight.

“Today the majority of cryptocurrency exchanges globally still involve their senior management in managing the transfer of virtual currencies that the clients order.” said Xu, speaking in an interview.

 Many Chinese cryptocurrency companies continue offering services to Chinese investors from offshore. The CEO of TideBit, Terence Tsang, which provided centralized crypto-exchange services in several nations said, “China is now targeting stricter regulation as we have witnessed many cases where the companies told that they were foreign entities, but they were operating in China saying that they have outsourced their operations to a Chinese company.”

Reportedly, InVault has already scored its first major deal from an undisclosed cryptocurrency exchange for the custodianship of more than one million Ethereum tokens.